The broad market selling cycle, if not fully concluded, has at least abated for the moment for our focus stocks, as they ended the week with a positive sentiment bias. As with the week before, seeing more positions cycle through the SHORT phase into AVOID phase as they stabilize, although some shorts continue to fall.
Generally, of shorts being exited this week, those of over 4 weeks duration are yielding significant gains, the longer the duration the larger the gain, while shorts of 3 weeks or less are being exited at a loss, due to unfortunate entry timing on the Monday at which prices were the lowest in recent weeks.
As the majority of our stocks move into “avoid” status temporarily it leaves a lower number of positions to act on. For those of you unable to short this is a positive development, however, as it suggests many stocks are nearer to the next BUY cycle than in prior weeks.
The past 8 weeks represent the longest – and only sustained – trend of the year, and thus the most productive for those able to act on short opportunities. As with most downtrends, it has been quick and extensive – erasing in 8 weeks all the gains it had taken passive investors in the S&P500 Index 42 weeks to attain (essentially a zero return for them in the preceding 10 months).
Most major Indexes remain negative on the year, only the Nasdaq Composite is positive, by +1.8%.
Highlights: 1 new weekly high. Double-digit long gains in PLNR +23% and SABR +10%.
Only 2 new weekly lows. Significant double-digit short gains remain in:
HPQ +16%
NVIV +27%
ABUS +45%
XOXO +11%
SFUN +25%
Stock list changes: A big key to earning consistent, significant annual returns is ensuring the stock list is comprised of the most productive stocks available. Expect stock list turnover to continue, as ongoing research identifies new stocks with a greater potential for trading gains than those on the list currently and stocks that diminish in productivity are dropped sooner.
Deleting VNET after routine scheduled evaluation, and adding Xura, Inc (MESG) [software] with a past 19 month compound trading return of +77.8% and trade indicated.